Correlation Between CIMC Vehicles and Inner Mongolia

Can any of the company-specific risk be diversified away by investing in both CIMC Vehicles and Inner Mongolia at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CIMC Vehicles and Inner Mongolia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CIMC Vehicles Co and Inner Mongolia BaoTou, you can compare the effects of market volatilities on CIMC Vehicles and Inner Mongolia and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CIMC Vehicles with a short position of Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of CIMC Vehicles and Inner Mongolia.

Diversification Opportunities for CIMC Vehicles and Inner Mongolia

0.14

Correlation Coefficient

CIMC Vehicles  Inner Mongolia

Average diversification

The 3 months correlation between CIMC and Inner is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CIMC Vehicles Co and Inner Mongolia BaoTou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia BaoTou and CIMC Vehicles is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CIMC Vehicles Co are associated (or correlated) with Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia BaoTou has no effect on the direction of CIMC Vehicles i.e., CIMC Vehicles and Inner Mongolia go up and down completely randomly.

Pair Corralation between CIMC Vehicles and Inner Mongolia

Assuming the 90 days trading horizon CIMC Vehicles Co is expected to generate 1.58 times more return on investment than Inner Mongolia. However, CIMC Vehicles is 1.58 times more volatile than Inner Mongolia BaoTou. It trades about 0.02 of its potential returns per unit of risk. Inner Mongolia BaoTou is currently generating about 0.0 per unit of risk. If you would invest  790.00  in CIMC Vehicles Co on October 11, 2024 and sell it today you would earn a total of  93.00  from holding CIMC Vehicles Co or generate 11.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CIMC Vehicles Co  vs.  Inner Mongolia BaoTou

CIMC Vehicles

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CIMC Vehicles Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Inner Mongolia BaoTou

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inner Mongolia BaoTou are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Inner Mongolia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CIMC Vehicles and Inner Mongolia

The main advantage of trading using opposite CIMC Vehicles and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CIMC Vehicles position performs unexpectedly, Inner Mongolia can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.

The idea behind CIMC Vehicles Co and Inner Mongolia BaoTou pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.